Sometimes it’s the little details that get you thinking isn’t it?
Did you know that the Renault/Nissan company just announced that it is planning to boost jobs in South Korea so as to be less reliant on Japan? In other words Japanese car manufacturing jobs are being relocated off-shore.
A tiny detail in world affairs. And one which supporters of globalism and free trade would find nothing wrong in at all. After all it is the founding mantra of the economic and political revolution of late twentieth century Globalisation, that people, goods and money must be free to move.
Those who lament jobs moving are characterised, by advocates of Globalisation, as nothing more than fearful little Luddites who are obviously no good at what they do and hate the fact that someone else better skilled, better motivated and harder working, is ready to do the job ‘better’. Such complainers, we are assured, are to be ignored because they are precisely the kind of people who are keeping us back.
In this country, those were the kind of people who used to make cars, mine coal and build ships. Globalization began long before the word gained currency. Those who were losing their jobs said, ‘We are being made redundant simply because there are people in poorer countries who will willingly do the same job for less money.’ Those who ran the businesses and the country said, ‘Nonsense! Free markets are not about crushing wages down to the lowest possible. It’s about building a better, freer more prosperous world by sweeping away ‘restrictive’ practices. The jobs are going to countries and people who can do the job better’.
I don’t want to argue whether Japanese cars were better than British ones. I don’t need to.
I simply want you to ask yourself this: Let’s suppose the Japanese were better at making cars, do you think they have now lost the knack? Do you think they have become less skilled or willing to work? Are those the reasons why their jobs are now being off-shored to South Korea?
Or do you think it might be because in South Korean they will do the same job for less money?
Remember all those strikes in China? Did you notice that they were all at factories making parts of Japanese cars for Honda and Toyota? Or making computers for Apple? Do you think the jobs were relocated to China because the Chinese are ‘better’ at doing the jobs or because they work for much. much less?
So tell me again. Is free trade and globalization motivated and powered by its ability to crush wages down to the lowest possible, or about making things ‘better’? You can dress it up in whatever theory you want, but there are some brute facts that destroy all the expert posturing and PhD preening.
For decades, if, like me, you were not convinced by the wonderful fairness of globalisation or the promise of greater prosperity for all, if you pointed to examples like those above, then you were moved up to level two denial and assailed with theory. Theories of Comparative and Absolute Advantage were rolled out to crush lonely objectors who dared to stand in the way.
These theories, especially ‘Comparative Advantage’, lie at the core of modern globalisation and free trade ideology. And like nearly all of economics, are master works of intricate detail and mathematical modelling but which rest on and depend upon such idealized assumptions of the world as to make them worse than useless. They begin by assuming perfect markets with perfect knowledge, that labour moves perfectly and costlessly and that there are no costs with moving goods either.
Once you accept all the necessary idealisations then the theory will show you what you want to see. That Free Trade is NOT about low wages. The theory helps to hide this fact from sight behind a beautiful landscape of theoretical wonders. The outcome of which is to say that it is not about low wages and impoverishment of people but about how if countries will all concentrate on doing ‘what they do best or better or least worse’, then we will all become better off.
Economics, like theology, is all about learning how to accept the necessary idealizations. Once the idealized assumptions have adjusted your mental landscape, then everything makes sense in your world. And the better you are at it, then the more you live in that world , see only it, and are able to exclude the real one. Any discrepancy between the ideal of your beautiful theory and the ugliness of the real, can be explained away as being due to interference and distortions of how the Free Market ‘should’ work and ‘would’ work if only it was left to be free enough from the meddlings of those unbelievers who don’t understand and complain.
The fact that Globalization and the Ideology of Free Trade have simply not worked for billions of people is not relevant to a mind lost in the beauty and perfection of the theory/theology. If it hasn’t worked for someone yet, either that is because it will in some unspecified future or, they would have been worse off without free trade. This last of course is unarguable and therefore very handy.
Were it not for the bank bail outs we would all be unemployed and homeless. Were it not for actions taken to save the banks then an extra million people would be out of work. There is no way of arguing against such statements.
If I punched you in the face and then told you that had I not done so, you would have died, would you believe me and say thanks? Because that is what we have been doing for two years now. And those punching us repeatedly in the face are having a fine old time watching us collecting our teeth from the floor, smiling anxiously at then and thanking them for helping us.